Can the Turnaround Artist Who Fixed Barneys Save the Army PX?

The Army and Air Force Exchange Service—widely known as the PX or the Exchange—is designed to provide everything a soldier might need or want, tax-free and often at a deep discount: uniforms, tactical gear, recreational sports equipment, vitamin supplements, electronics, furniture, booze, lawn ornaments. It serves 12.8 million customers in 50 states and more than 30 countries. In fiscal 2013 the PX had revenue of $8.3 billion and a profit of $332 million. About a third of that was reinvested in operations, and the rest—$208 million—was plowed into the Pentagon’s morale, welfare, and recreation programs to provide services like playing fields and on-base Boy Scout troops.

In the past five years, the store has seen a steady decline in sales as troop levels have fallen, and it estimates that profits could tumble by two-thirds by 2017, to $100 million. Now, as the U.S. winds down combat operations in Afghanistan, the Exchange is trying to reinvent itself for customers based at home. In 2012 it hired Tom Shull, its first civilian chief executive officer, a West Point graduate who led the luxury department store Barneys out of bankruptcy in 1999. He went on to run catalog company Hanover Direct and potato-chip maker Wise Foods before serving as the court-appointed chief restructuring officer for Fred Leighton, the upscale jeweler, during its 2009 bankruptcy proceedings.